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First-Time Home Buyers Are Getting Pushed Out of the Market

First-Time Home Buyers

First-time home buyers might be getting shut out of the market, according to a new survey released by Campbell/Inside Mortgage Finance. According to the survey, first-time home buyers only make up 34.7% of all single-family home sales nationwide in October. This is the lowest ratio the Campbell/Inside Mortgage Finance survey has seen in its three-year history. Meanwhile the National Association of Realtors claims that only 31 percent of recent purchases came from first-time home buyers.

Instead more homes are being purchased by current homeowners, who are moving up to larger homes or choosing to downsize as the sizes of their families and other lifestyle needs dictate. In October these current homeowners purchased 54 percent of all non-distressed homes sold. Most other homes have been purchased as investment properties.

First-time home buyers have seen their market share of home purchases decrease over the last few years due to the difficulty of obtaining FHA-insured loans, which have become increasingly difficult to obtain. Despite the record low interest rates, first-time home buyers generally put down lower payments than repeat buyers.

“Financing of first-time home buyers with low down payments threatens to become a significant problem in the U.S. housing market,” wrote Thomas Popik, research director for Campbell Surveys. “Fifty percent of first-time home buyers use FHA financing, but FHA insurance premiums are increasing and underwriting is becoming more strict. Private mortgage insurance has started to fill the gap, but the long-term status of private mortgage insurance is in question pending the publication of the Qualified Residential Mortgage regulation resulting from Dodd-Frank.”

Decreasing inventory is also having an effect. First-time home buyers typically look for homes in the lower price brackets, usually under $200K. These are the price points where inventory is especially light and continue to get smaller. It’s no wonder first-time home buyers are getting pushed out of the market right now. Here are the current homes under $200K currently available in the Round Rock area.

If you’re interested in selling your home, find out how much your home is worth. The small local inventory is making each new home a hot commodity and many homes don’t stay on the market for long.

If you are looking to purchase your first home, check out this first-time home buyers’ guide for some tips to keep in mind during the search process. If you’d like to talk to someone directly about purchasing a home, please call us at 512.791.0229. If you would like a more specific search created, please email us at Robert@RobertJFischer.com and we’ll get an automated search set up for you. Despite the tight market, we believe our team can find the perfect home for all first-time home buyers.